THE TWELFTH SCHEDULE
[See sections 32(2) 44(8) and 318(2)(P) (i)]
COMPUTATION OF PROFITS OF THE BUSINESS OF DEVELOPING OF A SPECIAL ECONOMIC ZONE MANUFACTURE OR PRODUCTION OF ARTICLE OR THINGS OR PROVIDING OF ANY SERVICE BY A UNIT ESTABLISHED IN A SPECIAL ECONOMIC ZONE
1. The provisions of this Schedule shall apply to the business specified herein below—
(a) the business of developing a special economic zone; and
(b) a unit established in a special economic zone engaged in the business of manufacture or production of article or things or providing of any service.
2. The profits of the specified business under paragraph 1 shall be the gross income from such business carried on by the assessee at any time during the financial year as reduced by the amount of business expenditure incurred by the assessee, wholly and exclusively, for the purposes of the business during the year.
3. The gross income referred to in paragraph 2 shall be the aggregate of—
(a) the accruals or receipts derived by the assessee from the specified business;
(b) the accruals or receipts derived by the assessee from the demolition, destruction, discarding or transferring of any business capital asset (other than land, goodwill or financial instrument) in respect of which deduction has been allowed, or allowable, under paragraph 4 in any financial year; and
(c) the amounts referred to in sub-section (2) of section 33.
4. The amount of business expenditure referred to in paragraph 2 shall be the aggregate of the amount of—
(a) operating expenditure referred to in section 35, incurred by the assessee;
(b) finance charges referred to in section 36, incurred by the assessee;
(c) expenditure on any licence charges, rental fees or other charges, if actually paid;
(d) capital expenditure incurred by the assessee;
(e) expenditure referred to in clauses (a) to (d) incurred before the commencement of specified business.
5. The profits computed under paragraph 2 shall be presumed to have been computed—
(a) after giving full effect to every loss, allowance or deduction referred to in sub-sections (1) to (3) of section 35, sub-section (1) of section 36 and sections 37 to 40 (both inclusive);
(b) after giving full effect to any deduction allowable under Sub-Chapter-IV of Chapter III in relation to the profits of the specified business.
6. The written down value of any business asset used in the specified business shall be computed as if the assessee has claimed and has been actually allowed the deduction in respect of depreciation under section 38, initial depreciation under section 39 and terminal allowance under section 40.
7. The amount of common costs (including depreciation) attributable to the specified business shall be determined in such manner as may be prescribed.
8. The provisions of this Schedule shall apply to a specified business, which fulfils the following conditions, namely:—
(a) it is not set-up by splitting up, or the reconstruction, of a business already in existence; and
(b) it is not set-up by the transfer to the specified business, of machinery or plant previously used for any purpose.
9. In this Schedule, unless the context otherwise requires,—
(a) any machinery or plant which was used outside India by any person other than the assessee shall not be regarded as machinery or plant previously used for any purpose, if—
(i) the machinery or plant was not, at any time prior to the date of the installation by the assessee, used in India;
(ii) the machinery or plant is imported into India from any country outside India; and
(iii) no deduction on account of depreciation in respect of the machinery or plant has been allowed or is allowable under the provisions of this Code, or the Income-tax Act, 1961 as it stood before the commencement of this Code, in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee;
(b) the condition specified in clause (b) of paragraph 8 shall be deemed to have been complied with if the total value of the machinery or plant or any part thereof, previously used for any purpose and transferred to the specified business does not exceed twenty per cent. of the total value of the machinery or plant used in the said business;
(c) the capital expenditure referred to in clause (d) of paragraph 4 shall not include any expenditure incurred on the acquisition of any land including long term lease, goodwill or financial instrument.
